Brokerages Stop Granting Secured Loans To Equity Investors


A growing number of securities companies have stopped providing asset-backed loans to equity investors.

An increasing number of securities companies are restraining asset-backed lending as investments in stocks with borrowed money are increasing rapidly.

On August 23, Korea Investment & Securities temporarily stopped providing new loans based on stocks, funds, bonds and ELSs. Indeed, the company has reached its credit supply limit.

The same is true in the insurance industry. On August 24, the General Insurance Association of Korea and the Korea Life Insurance Association met to discuss household debt issues. The South Korean government recently asked insurance companies to better control their loans.

In the insurance sector, outstanding loans to households rose 6.5 percent to about 125 trillion won from January to July of this year, while loans declined 0.7 percent in the same period of the previous year. The rate of increase is higher than the government’s target rate for the entire financial sector, which is 5-6%.

Credit card companies are also likely to become more meticulous. Loans to households by credit finance companies increased from around 600 billion won to 5.4 trillion won from July of last year to July of this year.


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